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Bank of Canada prepared to raise rates further if inflation progress stalls

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The Bank of Canada’s policymakers said they are still prepared to raise their benchmark interest rate further even as they hiked rates to their highest level in 22 years earlier this month.

The central bank on Wednesday released notes of the deliberations surrounding its interest rate decision on July 12, which saw the policy rate rise 25 basis points to 5.0 per cent.

The Bank of Canada’s July hike followed another quarter-percentage-point increase to the policy rate in June. Many economists at that time predicted a single rate hike would not have been sufficient to satisfy the central bank’s concerns that the decline in inflation could stall.

Debate ensued among observers and economists following the July 12 decision over whether the latest rate hike was really needed as inflation fell into the central bank’s one-to-three per cent target range.

The central bank governing council’s consensus in July was that leaving the key policy rate unchanged at 4.75 per cent would risk stalling the progress it had made in tamping down price increases, which has so far seen annual inflation cool to a low of 2.8 per cent from highs of 8.1 per cent last year.

But the “underlying inflation pressures” are proving “more persistent than expected,” policymakers expressed earlier this month. At the time of the July rate decision, more than half of the items in Statistics Canada’s consumer price index basket were seeing prices rise more than five per cent annually, the deliberations note.

Policymakers also flagged that “downward momentum in headline inflation was waning” and measures of core inflation, which strip out more volatile measures such as prices for gas and food, were showing signs of holding around 3.5 to 4.0 per cent.

Inflation could even rise again if the Bank of Canada did not continue to put pressure on the economy through higher rates, the governing council decided.

The governing council said that not acting forcefully enough to rein in inflation now could mean the central bank has to raise rates much higher later; conversely, if it raises the policy rate too high now, it risks making things “more painful than necessary” for Canadians.

“The consensus among members was that the cost of delaying action was larger than the benefit of waiting,” the deliberation notes read.

 

How the Bank of Canada is deciding where to go next

The central bank’s policymakers said that Canada’s labour market continues to show signs of tightness and household savings are still above pre-pandemic levels, which is continuing to fuel “excess demand” in the economy.

In the Bank of Canada’s surveys of businesses and consumers, short-term expectations for inflation are easing but remain elevated. Businesses continue to expect more frequent and substantial price increases as well, something the governing council flagged as needing to “normalize” before the inflation fight is over.

In preliminary discussions of where to take the key rate next and how to communicate its messaging, policymakers opted to leave future rate decisions up to a meeting-by-meeting basis.

“They agreed they were prepared to raise the policy rate further if inflationary pressures did not ease as projected and progress toward the (two per cent) target stalled,” the deliberations read. “But they did not want to do more than they had to.”

The Bank of Canada’s next interest rate decision is set for Sept. 6.

BMO senior economist Robert Kavcic said the deliberations did not reveal anything new about the July 12 decision, but does spell out the conundrum the Bank of Canada finds itself in.

“So, here is basically what the Bank is grappling with right now,” he wrote in a note to clients on Wednesday. “Either policy isn’t tight enough; or it is, but hasn’t been tight enough for long enough.”

While BMO is not expecting any further rate hikes this year, Kavcic wrote that the risks are weighted towards further tightening if the economic forecast doesn’t pan out to the Bank of Canada’s liking.

In an updated outlook released at the same time as the rate decision in July, the central bank called for inflation to hold around the three per cent market for the next year before dropping down to the two per cent target by mid-2025.

 

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Two youths arrested after emergency alert issued in New Brunswick

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MONCTON, N.B. – New Brunswick RCMP say two youths have been arrested after an emergency alert was issued Monday evening about someone carrying a gun in the province’s southeast.

Caledonia Region Mounties say they were first called out to Main Street in the community of Salisbury around 7 p.m. on reports of a shooting.

A 48-year-old man was found at the scene suffering from gunshot wounds and he was rushed to hospital with non-life-threatening injuries.

Police say in the interest of public safety, they issued an Alert Ready message at 8:15 p.m. for someone driving a silver Ford F-150 pickup truck and reportedly carrying a firearm with dangerous intent in the Salisbury and Moncton area.

Two youths were arrested without incident later in the evening in Salisbury, and the alert was cancelled just after midnight Tuesday.

Police are still looking for the silver pickup truck, covered in mud, with possible Nova Scotia licence plate HDC 958. They now confirm the truck was stolen from Central Blissville.

This report by The Canadian Press was first published Sept. 16, 2024.

The Canadian Press. All rights reserved.

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World Junior Girls Golf Championship coming to Toronto-area golf course

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MISSISSAUGA, Ont. – Golf Canada has set an impressive stretch goal of having 30 professional golfers at the highest levels of the sport by 2032.

The World Junior Girls Golf Championship is a huge part of that target.

Credit Valley Golf and Country Club will host the international tournament from Sept. 30 to Oct. 5, with 24 teams representing 23 nations — Canada gets two squads — competing. Lindsay McGrath, a 17-year-old golfer from Oakville, Ont., said she’s excited to be representing Canada and continue to develop her game.

“I’m really grateful to be here,” said McGrath on Monday after a news conference in Credit Valley’s clubhouse in Mississauga, Ont. “It’s just such an awesome feeling being here and representing our country, wearing all the logos and being on Team Canada.

“I’ve always wanted to play in this tournament, so it’s really special to me.”

McGrath will be joined by Nobelle Park of Oakville, Ont., and Eileen Park of Red Deer, Alta., on Team Canada 2. All three earned their places through a qualifying tournament last month.

“I love my teammates so much,” said McGrath. “I know Nobelle and Eileen very well. I’m just so excited to be with them. We have such a great relationship.”

Shauna Liu of Maple, Ont., Calgary’s Aphrodite Deng and Clairey Lin make up Team Canada 2. Liu earned her exemption following her win at the 2024 Canadian Junior Girls Championship while Deng earned her exemption as being the low eligible Canadian on the world amateur golf ranking as of Aug. 7.

Deng was No. 175 at the time, she has since improved to No. 171 and is Canada’s lowest-ranked player.

“I think it’s a really great opportunity,” said Liu. “We don’t really get that many opportunities to play with people from across the world, so it’s really great to meet new people and play with them.

“It’s great to see maybe how they play and take parts from their game that we might also implement our own games.”

Golf Canada founded the World Junior Girls Golf Championship in 2014 to fill a void in women’s international competition and help grow its own homegrown talent. The hosts won for the first time last year when Vancouver’s Anna Huang, Toronto’s Vanessa Borovilos and Vancouver’s Vanessa Zhang won team gold and Huang earned individual silver.

Medallists who have gone on to win on the LPGA Tour include Brooke Henderson of Smiths Falls, Ont., who was fourth in the individual competition at the inaugural tournament. She was on Canada’s bronze-medal team in 2014 with Selena Costabile of Thornhill, Ont., and Calgary’s Jaclyn Lee.

Other notable competitors who went on to become LPGA Tour winners include Angel Yin and Megan Khang of the United States, as well as Yuka Saso of the Philippines, Sweden’s Linn Grant and Atthaya Thitikul of Thailand.

“It’s not if, it’s when they’re going to be on the LPGA Tour,” said Garrett Ball, Golf Canada’s chief operating officer, of how Canada’s golfers in the World Junior Girls Championship can be part of the organization’s goal to have 30 pros in the LPGA and PGA Tours by 2032.

“Events like this, like the She Plays Golf festival that we launched two years ago, and then the CPKC Women’s Open exemptions that we utilize to bring in our national team athletes and get the experience has been important in that pathway.”

The individual winner of the World Junior Girls Golf Championship will earn a berth in next year’s CPKC Women’s Open at nearby Mississaugua Golf and Country Club.

Both clubs, as well as former RBC Canadian Open host site Glen Abbey Golf Club, were devastated by heavy rains through June and July as the Greater Toronto Area had its wettest summer in recorded history.

Jason Hanna, the chief operating officer of Credit Valley Golf and Country Club, said that he has seen the Credit River flood so badly that it affected the course’s playability a handful of times over his nearly two decades with the club.

Staff and members alike came together to clean up the course after the flooding was over, with hundreds of people coming together to make the club playable again.

“You had to show up, bring your own rake, bring your own shovel, bring your own gloves, and then we’d take them down to the golf course, assign them to areas where they would work, and then we would do a big barbecue down at the halfway house,” said Hanna. “We got guys, like, 80 years old, putting in eight-hour days down there, working away.”

This report by The Canadian Press was first published Sept. 16, 2024.

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Purple place: Mets unveil the new Grimace seat at Citi Field

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NEW YORK (AP) — Fenway Park has the Ted Williams seat. And now Citi Field has the Grimace seat.

The kid-friendly McDonald’s character made another appearance at the ballpark Monday, when the New York Mets unveiled a commemorative purple seat in section 302 to honor “his special connection to Mets fans.”

Wearing his pear-shaped purple costume and a baseball glove on backwards, Grimace threw out a funny-looking first pitch — as best he could with those furry fingers and short arms — before New York beat the Miami Marlins at Citi Field on June 12.

That victory began a seven-game winning streak, and Grimace the Mets’ good-luck charm soon went viral, taking on a life of its own online.

New York is 53-31 since June 12, the best record in the majors during that span. The Mets were tied with rival Atlanta for the last National League playoff spot as they opened their final homestand of the season Monday night against Washington.

The new Grimace seat in the second deck in right field — located in row 6, seat 12 to signify 6/12 on the calendar — was brought into the Shannon Forde press conference room Monday afternoon. The character posed next to the chair and with fans who strolled into the room.

The seat is available for purchase for each of the Mets’ remaining home games.

“It’s been great to see how our fanbase created the Grimace phenomenon following his first pitch in June and in the months since,” Mets senior vice president of partnerships Brenden Mallette said in a news release. “As we explored how to further capture the magic of this moment and celebrate our new celebrity fan, installing a commemorative seat ahead of fan appreciation weekend felt like the perfect way to give something back to the fans in a fun and unique way.”

Up in Boston, the famous Ted Williams seat is painted bright red among rows of green chairs deep in the right-field stands at Fenway Park to mark where a reported 502-foot homer hit by the Hall of Fame slugger landed in June 1946.

So, does this catapult Grimace into Splendid Splinter territory?

“I don’t know if we put him on the same level,” Mets executive vice president and chief marketing officer Andy Goldberg said with a grin.

“It’s just been a fun year, and at the same time, we’ve been playing great ball. Ever since the end of May, we have been crushing it,” he explained. “So I think that added to the mystique.”

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